Andhra Pradesh High Court - Amravati
Kommu Vijaya Raju, vs State Of Andhra Pradesh, on 18 December, 2019
Author: M.Satyanarayana Murthy
Bench: M.Satyanarayana Murthy
THE HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY WRIT PETITION Nos.19140, 19121, 19124, 19141 and 19038 of 2019 COMMON ORDER:
These writ petitions are filed under Article 226 of the Constitution of India, questioning the G.O.Ms.No.471, Reveneu (Excise-II) Department, dated 22.11.2019, declare the same as illegal and violate of Article 14 of the Constitution of India and consequently to set aside the same, directing the respondents to forbear from enforcing the same on the petitioners.
Since the claim of all the petitioners is same in these writ petitions, I find that it would be appropriate to pass common order.
The writ petition No.19140 of 2019 is taken as leading petition for the purpose of deciding the issue in controversy. All the petitioners are holding bar licensee, issued to them by the state under the provisions of A.P Excise Act, 1968 and A.P. Excise Grnat fo Lincence of Selling by bar and conditions of License) Rule, 2017. Bar licenses are issued for a period of 5 years but they are required to pay the annual license fee before the end of the excise year i.e., 30th June of every year, thus their licenses are valid up to the year 2022. The petitioners are carrying on the activity/business of seeling liquor purchased from the nodal agency i.e., A.P State Beverage Corporation, without any complaint whatsoever.
While licenses of these petitioner are subsisting, the state has issued an Ordinance No.5 of 2019 dated 30.09.2012, amending Section 22 of Andhra Pradesh Excise Act, 1968 and added clause-e which reads as follows :
"In the form of Retail Excise Tax, Additional Retial Excise Tax, Manufacture Excise Tax or any other levy, tax, fee or cess, as may be notified".
MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 2 In terms of ordinance, the respondents has issued G.O.Ms.No.422 dated 30.09.2019 by imposing levy of additional retail excise tax as a fixed component, at flat rate per bottle on the issue price of Indian made foreign liquor, foreign liquor, beer, wine and ready to drink varieties supplied by the wholesale IMFL depots to the retail licensees of wine shop, bar and in-house at the flat rates as specified in the table contained in the said G.O. Thus, by virtue of the said G.O., uniform levy of additional retail excise tax is being imposed per bottle on the retail licensees of shop, bar and in-house (clubs). By reason of the said government order, the retial price per bottle has been levied as follows :-
1.IMFL Category 60/90 180ML 375ML 750ML 1000ML 2000ML ML Size Size Size Size Size Size (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) Indian Made 10 20 10 80 100 250 foreign Liquor (All segments & Ranges)
2.FL Category 50/60 200/275ML 330 to 700/750 1500/2000ML ML Size Size 500 ML Size Size (Rs.) (Rs.) ML (Rs.) (Rs.) Size (Rs.) Foreign 10 20 40 80 250 Liquor (All segments & Ranges)
3.BEER Category 330 ML 500 ML 650ML 3000ML 50000ML Size Size Size Size Size (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) BEER (All 10 10 20 1000 2000 segments & Ranges)
4. READY TO DRINK Category 250/275 ML SIZE (Rs.) Ready to Drink (All ranges) 20 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 3 It is specifically contended that the G.O.Ms.No.471 dated 22.11.2019 issued in deviation of G.O.Ms.no.422 dated 30.09.2019 subjecting the bar licensees to the additional hardship of higher additional retail excise tax (obviously to discourage the business of bar and restaurant and to promote the business of retail wine shop which are now being run by the State Government itself) and thereby subjecting the bar licensees to levy of additional retail excise tax by 200% compared to the retail licensees and licensees of in-house consumption. The impugned government order containing any reason for the discriminatory treatment meted out to the bar licensees. Aggrieved by the government order, the writ petitions are filed on various grounds, the specific contentions urged in the writ petitions are stated as under in seriatim :
a) The retail licensees by bar and retail licensees by in-house are conducting the same business of sale of liquor which is purchased or procured from the A.P State Beverage Corporation. Thus, all the licensees either shop or bar or in-house sale are similarly situated as regards the sale of IFML and foreign liquor but by impugned G.O.Ms.No.471, a sub-classification is being introduced by subjecting the bar licensees to a harsh treatment, obviously to discourage consumption of liquor in the premises of the bar licensee and to promote the sale of liquor by retail licensees by shop. In view of the present excise policy, there are no private retail licensees and therefore the state itself is conducting the retail vending by outsourcing the personnel. Thus, the impugned government order is in gross violation of Article 14 of the Constitution of India, since, it denies equality and equal treatment to the bar licensees as against the retail shop licensees and retail sale in-house and contrary as per the settled law laid down AIR 1958 SC 538 Para-11. Therefore, the discrimination of petitioners being bar licensees is illegal. Neither the MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 4 ordinance No.5 of 2019 nor the impugned G.O have provided for dissimilar treatment as regards the sale of liquor in Bar and restaurants when compared to the sale of liquor by shop or in-house and increase of additional retail excise tax by 200% is discriminatory and violative and equality clause and the ratio of the Hon'ble Supreme Court in AIR 1983 SC 130.
b) The State has not modified or superseded the G.O.Ms.No.422 dated 30.09.2019 and passed G.O.Ms.No.471 dated 22.11.2019 by imposing additional retail excise tax by increasing 200%. Therefore, the impugned G.O.Ms.No.471 dated 22.11.2019 is contra to G.O.Ms.No.422 dated 30.09.2019, which is unsustainable in law.
c) The State Government proposes to condemn the prosperity of bar and restaurant but still continue to permit the sale of liquor by the licensees collecting huge amount as license fee and such 200% increase on existing tax is only to crush bar licensees so that the business being carried on by the State i.e., sale of liquor by shops will increase due to heavy taxes being imposed on the consumer of liquor in the bars. The imposition of additional retail excise tax is malafide and discriminatory and hostile treatment, in gross violation of Article 14 of Constitution of India.
d) It is further contended that yearly license fees and non-refundable registration charges ranging from Rs.10,00,000/- to Rs.30,00,000/- based on the population of village, municipality or corporation with 10% enhancement or escalation per year for the total license period of five years. Whereas fee payable by the retail shops is only Rs.1,000/- per annum uniformly besides this discrimination in collecting license fee, imposed additional burden on the bar licensees so as to improve their business being carried on by the State, which is nothing but arbitrary exercise of power. Thereby, the petitioners sought to set aside G.O.Ms.No.471, Revenue (Excise-II) Department MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 5 dated 22.11.2019, declaring the same as arbitrary and violative of Article 14 of the Constitution of India.
The respondent Nos.1 to 5 filed detailed counter raising specific contentions that imposition of excise duty is a type of indirect tax that is levied on the manufacture of excisable goods. The tax that is sought to be levied in this case, is not paid directly by the petitioners but is passed on to the consumer by a manufacturer or producer of goods as a part of the price of the product. The ultimate incidence of an excise duty, a typical indirect tax, is on the consumer, who pays as he consumes or expends. Hence, the present writ petition cannot be maintained as the petitioners are licensees of bars and additional retail excise tax is an indirect tax that can be passed on to the end consumer and if at all there is any one aggrieved it must be the end consumer upon whom the burden of paying additional retail excise tax shall lie.
The imposition of tax is only to discharge the obligation of the State imposed by Article 47 of Constitution of India, which places responsibility on every State Government to endeavor to bring about prohibition of the consumption, except for medicinal purposes of the intoxicating drinks and of drugs, which are injurious to health as on the Directive Principles of the State Policy. The State Legislature is having competence to enact laws on the subject of intoxicating liquor relating to their production, manufacture, possession, transport, purchase and sale. Thus, the State has the exclusive claim or right to deal with liquor in all the aspects and it is well within the power of the State to impose any restrictions in order to regulate the consumption of liquor held by the Hon'ble Supreme Court in a catena of judgments. It is also further contended that it is a step towards achieving the objective of Article 47 of the Constitution of India, the MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 6 State has adopted a policy to implement prohibition in a phased manner. Keeping in view the welfare of the people, the state has reduced the number of shops from 4,380 to 3,500 and the 6th respondent i.e., A.P State Beverages Corporation Limited has been granted exclusive privilege to run these shops w.e.f. 01.10.2019 and also reduced the working hours, during which the shops should be open vide G.O.Ms.No.420 Revenue (Ex.II) Department dated 30.09.2019. Further, the State has discontinued with the provision that was originally made for Permit Rooms at shops, which were primarily used by the people for consumption of liquor. After such restrictive measures were taken by the State, all the bars which were granted license to sell alcohol till 11.00 PM have started taking undue advantage of the shop timings and started indulging in several violations of their license conditions. Apart from the same, due to the availability of liquor for additional hours at the bars, the sales at the bars have been raised phenomenally, the said increase was acting detriment to the objective of the State to implement prohibition in a phased manner. The state, in order to regulate the rise in sales, coupled with the intention to implement the avowed prohibition has imposed the present additional retail excise tax on the bars, which are placed on a different plank when compared to the shops.
The respondents denied the allegations made in various paras in seriatim that there is neither illegal nor arbitrary or discriminatory imposition of additional retail excise tax on the sale of liquor by bars :
a) Shops, sell sealed or capsuled bottled etc., at MRP, whereas Bars sell liquor in loose for consumption on licensed premises along with food and charges prices higher than the MRP. That the prices of the loose liquor i.e., pegs and glasses vary from Bar to Bar. In other words, the Bar MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 7 licensees have the liberty to fix their own retail prices for the liquor/beer sold by them. The only manner in which the State can regulate the price of the alcohol which is directly proportional to the consumption of the same is by levying Additional Retail Excise Tax.
b) Bars serve food and offer facility for consumption of liquor in the licensed premises while shops are prohibited from allowing the licensed premises while shops are prohibited from allowing consumption in the Shops specially after the shops are taken over by the 6th respondent were done away with.
c) The business hours of the Bars and Shops are different.
Business hours of the Bars is between 10.00 AM to 11.00 PM whereas the Shops, it is between 11.00 AM and 8.00 PM. Therefore, the Bars which are allowed to conduct business for 13 hours cannot be equated with 9 hours of business of the shops.
d) Both are different privileges granted under Section 17 of A.P Excise Act, 1968 and operate under different sets of Rules.
e) By virtue of restriction on the quantity which can be possessed by an individual, the shops cannot sell more than the quantity that has been prescribed as per the upper limit for possession, whereas there is no restriction on consumption of alcohol at a Bar. The limit on the sale of bottles in the shops has been prescribed under G.O.Ms.No.411 dated 24.09.2019.
In view of glaring differences between bars and shops, which were taken over by 6th respondent, two of them cannot be equated as MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 8 there is an intelligible differentia between the conduct of business and the quantum of income of the shops and bars. Question of discriminating the Bar Licenses from the shop licensees by imposing additional retail excise tax is not violative under Article 14 of Constitution of India does not arise.
The date of consumption in bars in the month of October shows 100% increase which does not subserve the object of policy of the Sate. The sole motive behind the issuance of notification in challenge is for regulating the increasing sale of alcohol at bars. Hence, the imposition of additional retail excise tax on the sale of liquor in the bars is not contrary to Article 14 of Constitution of India as held by the Apex Court in "State of Jammu and Kashmir and others Vs. Trikuta Roller Flour Mills Private Limited and others1" that judicial review of a police decision, especially an economic policy decision, shall have to be restricted to the presence of just and valid reasons, eschewing arbitrariness, as so not to fall foul of Article 14 of the Constitution of India. But, in the garb of judicial review, the Court shall not examine the sufficiency or adequacy of the reasons or materials, in the manner of an appellate authority, to substitute its own wisdom for that of government, that would tantamount to taking over of executive decision making process. Therefore, the notification imposing the additional retail excise tax on bars vide G.O.Ms.No.471 dated 22.11.2019 imposing additional retail excise tax is not illegal, contrary and violative of the Article 14 of the Constitution of India, hence the writ petitions are liable to be dismissed.
During hearing, learned Senior Counsel for petitioners Sri Vedula Venkataramana, Sri D.V. Seetharam Murthy and other 1 AIR 2017 SC 4982 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 9 counsels Sri O. Manohar Reddy and Ramana Reddy contended in one voice that G.O.Ms.No.471 is contrary to G.O.Ms.No.422. The State Legislature imposed such additional retail excise tax which is not within powers conferred on the state under Section 22 of A.P Excise Act. More so, Andhra Pradesh State Government has taken policy decision known as bar policy issued G.O.Ms.No.471 dated 22.11.2019, imposing certain restrictions on the bar business and withdrawing all the existing licenses by 31.12.2019. Therefore, in the interim period, additional retail excise tax is imposed by amending Act suitably which is under challenge. Another batch of writ petitions before the other court, which deals with matters pertaining to challenge of various statutes. Therefore, the alleged imposition of additional retail excise tax on the liquor sold in the bars is discriminatory on the bars with that of retail wine shops and imposition of such tax by increasing 200% on the existing tax is nothing but arbitrary, exercise of power by the executive in the absence of statutory guidelines. Without any reason to impose additional retail excise tax and not passed on intelligible differentia is violative of Article 14 of the Constitution of India. That apart when an executive decision is taken in arbitrary manner this Court while exercising judicial review under Article 226 of Constitution of India can struck down such order passed by the government in exercise of executive powers and therefore, the G.O.Ms.No.471 dated 22.11.2019 is liable to be struck down.
The learned Senior Counsel D.V. Seetharam Murthy, further contended that, imposition of additional retail excise tax is violative of Article 19 (6) of Constitution of India, since such discriminatory treatment of bars with that of wine shops effects business of the bars on account of imposition of heavy rate of additional retail excise tax MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 10 will drastically decrease its business. Whereas, the business run by the state would rise to maximum extent and thus such discriminative attitude of the Government against the petitioners who are bar licensees is capricious and arbitrary and thereby such Government Order is to be struck down.
Sri O. Manohar Reddy, learned counsel, specifically contended that there cannot be discrimination in imposition of tax varying from person to person or shop and bar. Similarly, Sri Ravindra Reddy, learned counsel for petitioners, mainly contended that when the state exercise such arbitrary power, the Court can exercise its power under Article 226 of Constitution of India and placed reliance on Judgment of Single Judge in W.P.No.2749 of 2015, which was confirmed by Division Bench in "Government Of Andhra Pradesh vs A. Hanumantha Rao2"
Sri K. Sreenivasa Murthy, learned counsel for petitioner, has drawn attention of this Court to the Judgment of the Apex Court in "K.R. Lakhshman and others Vs. Karnataka Electricity Board and others3" while contending that such discriminatory treatment of bars and shops while imposing the additional retail excise tax is arbitrary and discriminatory. Thereby, this Court can exercise power under Article 226 of Constitution of India and set aside the impugned G.O. The learned Advocate General for the State, mainly contended that in order to prohibit the consumption of alcohol partly, the excise police was formulated by the state and imposition of tax at a particular rate under G.O.Ms.No.422 is not arbitrary or discriminative and not violative fundamental right guaranteed under 2 2005 (2) ALT 653 3 2001 (1) SCC 442 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 11 the Constitution of India. Any change to rate of tax, fixation of rate by the State Government would not amounts to violation of fundamental right, therefore, the G.O. can not be set aside while exercising jurisdiction under Article 226 of the Constitution of India. Sale of liquor or carrying on sale of liquor is not protected, relied on the Judgment of the Apex Court in "K.M. Mohamad Abdul Khader Firm vs State Of Tamil Nadu & Others4" He also further contended that when power is conferred on the sate to impose tax that unless the amendment is set aside, this Court cannot set aside the impugned G.O.Ms.No.471 dated 22.11.2019 and such taxing provision in Excise Act cannot be set aside on the grounds of its discrimination, this Court cannot exercise such power to set aside the G.O declaring as illegal, arbitrary and violative of Article 14 of the Constitution of India.
Considering rival contentions, perusing the material available on record, the points that arise for consideration are:
(1) Whether imposition of additional retail excise tax is violative of fundamental right guaranteed under Article 19 (1) (g) of the Constitution of India?
(2) Whether imposition of additional retail excise tax on the sale of liquor in the Bar is discriminative and arbitrary? If so, whether G.O.Ms.No.471 Revenue (Excise-II) Department dated 22.11.2019 is liable to be struck down?
P O I N T No.1:
The first and foremost contention raised by the learned counsel in all these petitions is that the alleged imposition of additional retail excise tax on the liquor sold in the Bars drastically affects the 4 AIR 1985 SC 12 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 12 business of the petitioners and whereas the business being carried on by the State after adopting new excise policy will increase the state business. Therefore, the act of the State is violative of the right to carry on business or fundamental right guaranteed under Article 19 of the Constitution of India.
Learned Advocate General contended that the decision taken to impose additional retail excise tax on the sale of liquor in the Bars is only to implement Article 47 of the Constitution of India and that the right to carry on liquor business is not a fundamental right guaranteed under Constitution of India.
Article 19 (1) of the Constitution of India deals with protection of certain rights regarding freedom of speech etc., and it is inclusive of right to carry on any profession or business. However, the fundamental right guaranteed under 19 (1) of the Constitution of India is hedged by clause (6) of the same Article; sub-clause (ii) is relevant, according to it the carrying on business by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise shall not effect. Thus, the State is competent to make any laws by imposing reasonable restrictions on the exercise of the right conferred relating to the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business by any citizen, more particularly when State is carrying on trade or business.
Learned senior counsel for the petitioners contended that the burden imposed on the Bars is directly burden on the consumer of the liquor in the Bars and on account of such imposition, no consumer will consume liquor in Bar. Thereby, the business in the MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 13 Bars will be drastically reduced to maximum extent as it is difficult to bear such burden by the consumer.
It appears from the conduct of the parties, the liquor business is highly profitable business, despite imposing severe conditions, the prospective licensees are accepting those onerous conditions and responsible for enormous litigation. Keeping in view, the conduct of the parties aspiring for obtaining licenses, in one of the judgments of the Apex Court in "P.N. Kaushal v. Union of India5" Justice V.R. Krishna Iyer described the liquor business in his inimitable style, as follows:
"A raging rain of writ petitions by hundreds of merchants of intoxicants hit by a recently amended rule declaring a break of two "dry" days in every "wet" week for licensed liquor shops and other institutions of inebriation in the private sector, puts in issue the constitutionality of Section 59(f)(v) and Rule 37 of the Punjab Excise Act and Liquor Licence (Second Amendment) Rules, (hereinafter, for short, the Act and the Rules). The tragic irony of the legal plea is that Articles 14 and 19 of the very Constitution, which, in Article 47, makes it a fundamental obligation of the State to bring about prohibition of intoxicating drinks, is pressed into service to thwart the State's half-hearted prohibitionist gesture. of course, it is on the cards that the end may be good but the means may be bad, constitutionally speaking. And there is a mystique about legalese beyond the layman's ken! To set the record straight, we must state, right here, that no frontal attack is made on the power of the State to regulate any trade (even a trade where the turn-over turns on tempting the customer to take reeling roiling trips into the realm of the jocose, belliocose, lachrymose and comatose)."
The present writ petitions are also of such kind, proliferating litigation. Chapter IV of the Constitution of India deals with Directive principles of State Policy. Article 47 of the Constitution of India imposes an obligation on the State to raise the level of nutrition and the Standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavour to bring about prohibition of the consumption except for 5 1978 (3) SCC 558 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 14 medicinal purposes of intoxicating drinks and of drugs which are injuries to health. Rightly, learned Advocate General contended that to discharge the obligation of the State, additional retail excise tax was imposed by suitably amending the Act to achieve the real object of Article 47 of the Constitution of India, since it not only affects the public health of consumer either in the bar or in the shop, but it will have its impact on the society. Therefore, imposition of such additional retail excise tax, though burden, will reduce the consumption of liquor by the public, thereby the public health is to be protected.
The Apex Court in "The Kerala Bar Hotels Association v. State of Kerala6" had an occasion to deal with issue of discriminating Five Star Hotels and other hotels to run Bar and Restaurants and held that it was for the State to evolve a policy, taking into account the welfare of the people, and the Courts have a very narrow and limited scope to intervene in such policy decisions. It is also not for the Courts to find whether a more feasible view is possible or whether a better policy could be evolved, which intrinsically remains a subjective exercise. The Division Bench also differentiated the factual matrix obtaining before it from that in "State of Maharashtra v. Indian Hotel and Restaurants Association7", commonly referred to as "the Dance Bar Girls case", on the premise that in the latter the fundamental rights of thousands of dancing girls was also in issue, and dancing in itself is not harmful to the health, although it could affect the morality of people and the dignity of women based on the manner in which the dance was performed. The Division Bench noted that the impugned policy is in 6 AIR 2016 SC 163 7 (2013) 8 SCC 519 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 15 consonance with Article 47 of the Constitution which provides that the State shall regard the raising of nutrition and the standard of living of its people and the improvement of public health as among its primary duties, in particular endeavoring to bring about prohibition.
The High Court of Karnataka at Bengaluru in "HIP Bar Private Limited v. State of Karnataka (W.P.No.6448 of 2019)" while dealing with an identical issue with regard to imposition of Karnataka State VAT on sale of liquor by online has considered the scope of Article 47 of the Constitution of India, observed that in terms of Article 47, one of the directive principles of State Policy, State has the exclusive right or privilege in respect of potable liquor. It is well settled that State can create a monopoly either in itself or in an agency created by it for manufacture, possession sale and distribution of liquor. If such trade or business is permitted in potable liquor, State regulation is imperative. State of Karnataka is regulating the business in liquor under the Act, 1965 permitting the private parties to deal in liquor business. An effort has been made before the Karnataka High Court, to attack the Regulation of the State on the anvil of Article 14 and 19 of the Constitution in insisting for closure of the Online order processing of the potable liquor, whereas, liquor to be traded privately. It cannot be held that there is no intelligible differentia in the classification that has been carved out by the legislature or by the State Policy. Online business of the petitioner relating to potable liquor forms a class by itself and no such discrimination is made by the State amongst the similarly situate class.
The fundamental right to carry on the present business claimed by the petitioner on the premise i.e., sale of liquor is not res MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 16 extra commercium and the right under Article 19 (1) (g) of Constitution exists is not absolute but subject to the State permitting to undertake the business. Business of liquor stands on a different footing from other trades, the State possesses the right of control over all aspects of intoxicants. Imposing fetters or restrictions by the State is mandatory though there is no prohibition policy in the State. In such circumstances, a right is vested with the State to monitor, regulate, and prevent from conducting the activities / trade in liquor. Any such restriction imposed on the petitioner to achieve the laudable object of the Act, cannot be termed as an infringement of fundamental right guaranteed under Article 19(1) (g) of the Constitution of India and referred "The Kerala Bar Hotels Association v. State of Kerala" (referred supra), and finally concluded that imposition of Karnataka State VAT on sale of liquor by online trade is not violative of Article 19 (1) (g) of the Constitution of India and it is only taking into consideration of public health and to reduce the consumption of liquor, such imposition is levied. This principle is nothing but reiteration of principle laid down in "The Kerala Bar Hotels Association v. State of Kerala" (referred supra).
In view of the undisputed law declared by the Apex Court in various judgments, it is the State's obligation to create prohibition except for limited purpose permitted under Article 47 of the Constitution of India.
The main endeavour of the learned Senior counsel for the petitioners in all these petitions is that it is a fundamental right of the citizen of India to trade in liquor as guaranteed under Article 19 (1) (g) of the Constitution of India. But this contention is no more MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 17 res integra in view of the law declared in "Khoday Distilleries Limited v. State of Karnataka8" "Khoday Distilleries Limited v. State of Karnataka9". Similarly, the Division Bench of this Court in "Government of Andhra Pradesh v. A.Hanumantha Rao" (referred supra) while referring to earlier judgments of the Apex Court held that there is no fundamental right to trade in intoxicants.
As such, there is no fundamental right to trade in intoxicants like liquor has been conclusive as held by the Apex Court in "State of Punjab v. Devans Modern Breweries Limited10" where taking note of the earlier Constitution Bench decisions, the argument that a citizen has fundamental right to trade in intoxicant liquor was repelled. In "Har Shankar v. Deputy Excise and Taxation Commissioner11", the Supreme Court after considering the decisions of Constitution Benches concluded that right to carry on trade is not a fundamental right. In "State of Andhra Pradesh v. McDowell and Company12", the Supreme Court having re-examined the entire issue including the Constitution Bench decision in "Khoday Distilleries v. State of Karnataka" (referred supra), concluded that a citizen has no fundamental right to trade in intoxicant liquors and that such trade or business can be completely prohibited.
Any restriction on sale of liquor cannot be challenged as violative of Article 19 (1) (g) of the Constitution of India vide "Nashirwar and Ors. vs. State of Madhya Pradesh13" 8
(1996) 10 SCC 304 9 (1995) 1 SCC 574 10 2003 ( 10 ) SCALE 202 11 [1975]3SCR254 12 [1996]3SCR721 13 AIR 1975 SC 360 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 18 In "Razakbhai Issakbhai Mansuri v. State of Gujarat14" it is held as follows:
"Although the Directive Principles of State Policy as contained in Part IV of the Constitution are not enforceable by Courts, nonetheless it is the duty of the State to give effect to those principles by making appropriate laws. It has been described as matters of constitutional obligation of the State to do so in the public interest. A large body of legislation under Article 19(1)(g) when challenged, has been upheld by Courts, as being in furtherance of such policy, as valid on the ground of the Directive Principle."
In view of the law declared by the Apex Court in various judgments referred supra, including the judgment relied on by the learned counsel for the petitioners in "Khoday Distilleries Limited v. State of Karnataka" (citation No.3 referred supra), a right to carry on trade in liquor is not a fundamental right guaranteed under Constitution of India.
In view of law declared by Apex Court and foregoing discussion, imposition of additional retail excise tax on the sale of liquor in Bars cannot be challenged on the ground of violation of Article 19 (1) (g) of the Constitution of India since sale of liquor is not a fundamental right guaranteed under Article 19 (1) (g) of the Constitution of India. Accordingly, the point is held against the petitioners and in favour of the State.
P O I N T No.2:
One of the grounds raised by the learned counsel for the petitioners is that the action of the State imposing 200% additional retail excise tax on the liquor sold in the bar is discriminative, arbitrary and unreasonable.
14
1993 Supp (2) SCC 659 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 19 Originally, Section 22 of the Andhra Pradesh Excise Act, 1968 prescribes modes of levying duties including excise duty, additional excise duty etc. Initially, an ordinance was issued to amend the A.P.Excise Act, 1968. Later, amended the Act by incorporating clause (e) to Section 22, which runs as follows:
"(e) In the form of Retail Excise Tax, Additional Retail Excise Tax, Manufacture Excise Tax or any other levy, tax, fee or cess, as may be notified"
In pursuance of the power conferred on the State to impose retail excise tax, additional retail excise tax, manufacture excise tax etc., initially Government passed G.O.Ms.No.422 dated 30.09.2019 to impose additional retail excise tax on the sale of IMFL, FL, Beer, Ready to drink and the details are given hereunder:
1.IMFL Category 60/90 180ML 375ML 750ML 1000ML 2000ML ML Size Size Size Size Size Size (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) Indian Made 10 20 40 80 100 250 foreign Liquor (All segments & Ranges)
2.FL Category 50/60 200/275ML 330 to 700/750 1500/2000ML ML Size Size 500 ML ML Size Size (Rs.) (Rs.) Size (Rs.) (Rs.) (Rs.) Foreign Liquor 10 20 40 80 250 (All segments & Ranges)
3.BEER Category 330 ML 500 ML 650ML 3000ML 50000ML Size (Rs.) Size Size Size Size (Rs.) (Rs.) (Rs.) (Rs.) BEER (All 10 10 20 1000 2000 segments & Ranges) MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 20
4. READY TO DRINK Category 250/275 ML SIZE (Rs.) Ready to Drink (All ranges) 20 Later, impugned G.O.Ms.No.471 Revenue (Excise.II) Department dated 22.11.2019 totally changing the rates prescribed in G.O.Ms.No.422 dated 30.09.2019.
1.Indian Made Foreign Liquor (IMFL)
Category 60/90 180ML 375ML 750ML 1000ML 2000ML
ML Size Size Size Size Size Size
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Indian Made 30 60 120 240 300 750
foreign Liquor (All
segments &
Ranges)
2.Foreign Liquor (FL)
Category 50/60 200/275ML 330 to 700/750 1500/2000ML
ML Size Size 500 ML ML Size Size
(Rs.) (Rs.) Size (Rs.) (Rs.)
(Rs.)
Foreign Liquor 30 60 120 240 750
(All segments &
Ranges)
3.BEER
Category 330 ML 500 ML 650ML 3000ML 50000ML
Size (Rs.) Size Size Size Size
(Rs.) (Rs.) (Rs.) (Rs.)
BEER (All 30 30 60 3000 6000
segments &
Ranges)
4. READY TO DRINK
Category 250/275 ML SIZE (Rs.)
Ready to Drink (All ranges) 60
On comparison of the rates of additional retail excise between G.O.Ms.422 and G.O.Ms.No.471, there is a vast difference between the rates and the rate of additional retail excise tax is increased to manifold, almost 200% above the rate prescribed in G.O.Ms.No.422.
MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 21 One of the contentions raised by the Sri Vedula Venkataramana, learned senior counsel, is that without superseding the G.O.Ms.No.422 dated 30.09.2019, State issued G.O.Ms.No.471 dated 22.11.2019, which is impugned in the writ petition is an illegality. But in the G.O.Ms.No.471 dated 22.11.2019 it is stated that "in exercise of the powers conferred by Clause (e) of Section 22 of the Andhra Pradesh Excise Act, 1968 (Andhra Pradesh Act No.17 of 1968) and in partial modification of the orders issued in G.O.Ms.NO.422, Revenue (Excise-II) Department dated 30.09.2019, the Government of Andhra Pradesh hereby levy Additional Retail Excise Tax (ARET). As such G.O.Ms.No.471 dated 22.11.2019 is a modification of G.O.Ms.No.422 dated 30.09.2019. Therefore, the State need not specifically supersede G.O. and fix the rates on the liquor being sold in Bars. Hence, the contention of the learned Senior counsel is hereby rejected.
One of the major contentions of the learned senior counsel for the petitioners is that discriminating the Bars from shops imposing higher rate of additional retail excise tax is violative of Article 14 of the Constitution of India as there is no reasonable or rationale basis for such discrimination. No doubt, clause (e) of Section 22 as amended, is a taxing provision and the question, whether such taxing provision can be declared as illegal on the alleged ground of discrimination or unreasonable classification?
No doubt, such unreasonable discrimination is impermissible, but reasonable discrimination based on rationale is permissible under law.
Classification must be based on an intelligible differentia which distinguishes those that are grouped together from others; and that MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 22 differentia must have rational relation to the object sought to be achieved.
The Apex Court "The State Of West Bengal V Anwar Ali Sarkar 15" has held that mere classification, however, is not enough to get over the inhibition of Article 14. It has been held that classification must not be arbitrary but must also be rational and it must not only be based on some qualities or characteristics which are to be found in all persons grouped together and which is not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of legislation.
If this principle is applied to the present facts of the case, all Bars can be treated as one class and shops being run by the State as another class, in view of the recent excise policy adopted by the State, but imposed tax by issuing impugned G.O. on sale of liquor in Bars alone. Therefore, shops as a whole can be treated as one class and Bars together as another class.
Section 2 (1-A) defined "Bar" and Section 2 (28-A) defined "Shop". A con-joint reading of the definition of "Bar" and "Shop", they are totally distinct and they belong to different class. Therefore, such discrimination between Bars as one group and shops as another group is permissible under Article 14 of the Constitution of India.
The Apex Court in "State Of Uttar Pradesh And Others V. Deepak Fertilizers & Petrochemical Corportion Ltd16" examined as to whether the exemption of Urea NPK 23:23:0 (product of the assessee) - petitioner which was exempted from tax being withdrawn was discriminatory or otherwise and in this background, the Court held that whenever any type of law is to be made for the purposes of 15 AIR 1952 SC 75 16 (2007)10 SCC 342 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 23 levying tax on a particular commodity or exempting some other commodity from taxation, a sort of classification is to be made. In the same judgment, the Apex Court held that the State has enormous powers in the matter of legislation and in enacting fiscal laws.
Great leverage is allowed in the matter of taxation laws because several fiscal adjustments are to be made by the government. In Sri Kempanaika v. State of Karnataka (W.P.Nos.2169/2017 & 16733- 743/2017 ) depending upon the needs of the Revenue and the economic circumstances prevailing in the State, such observation was made. Even, so, an action taken by the State cannot be irrational and so arbitrary so as to one set of rules for one period and another set of rules for another period by amending the laws in such a manner as to withdraw the benefit that had been given resulting in higher burden so far as the assessee is concerned without any reason. Retrospective withdrawal of the benefit of set-off only for a particular period should be justified on some tangible and rational ground, when challenged on the ground of unconstitutionality. Even if, this principle is applied to the present facts of the case, imposition of tax in pursuance of the power conferred on the State under clause
(e) of Section 22 of the A.P.Excise Act, which is not challenged in the present writ petitions, is based on State Financial condition as observed in Sri Kempanaika Vs. State of Karnataka (W.P.Nos.2169/2017 & 16733-743/2017). Moreover, an identical issue of additional tax at different rates came up for consideration in "K.M.Mohamad Abdul Khader Firm Vs The State Of Tamil Nadu And Others" (referred supra) while dealing with the contentious issue of levy of additional tax at different rates on different dealers depending upon their turnover would be permissible and repelling the contention of levy being non collectable from the persons being MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 24 not violative of Article 14 of the Constitution, and such classification being permissible.
In "N.Venugopala Ravi Varma Rajah Vs Union Of India And Another17" the Apex Court held that a taxing statute is not exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions, occupations are objects and if classification is rationale, Legislature is free to choose objects of taxation. It has been held as under:
"14. Equal protection clause of the Constitution does not enjoin equal protection of the laws as abstract propositions. Laws being the Date of Order 11-09-2017 W.P.Nos.2169/2017 & 16733-743/2017 Sri. Kempanaika Vs. State of Karnataka & another expression of legislative will intended to solve specific problems or to achieve definite objectives by specific remedies, absolute equality or uniformity of treatment is impossible of achievement. Again tax laws are aimed at dealing with complex problems of infinite variety necessitating adjustment of several disparate elements. The Courts accordingly admit, subject to adherence to the fundamental principles of the doctrine of equality, a larger play to legislative discretion in the matter of classification. The power to classify may be exercised so as to adjust the system of taxation in all proper and reasonable ways the Legislature may select persons, properties, transactions :and objects; and apply different methods and even rates of tax, if the ,Legislature does so reasonably. Protection of the equality clause does not predicate a mathematically precise or logically complete or symmetrical classification : it is not a condition of the guarantee of equal protection that all transactions, properties, objects or persons of the same genus must be affected by it or none at all. If the classification is rational, the Legislature is free to choose objects of taxation, impose different rates, exempt classes of property from taxation, subject different classes of property to tax in different ways and adopt different modes of assessment. A taxing statute may contravene Article 14 of the Constitution if it seeks to impose on the same class of property, persons, transactions or occupations similarly situate; incidence of taxation, which leads to obvious inequality. A taxing statute is not, therefore, exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions, occupations or objects.
17 (1969)1 SCC 681 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 25 In "Shashikant Laxman Kale And Another Vs Union Of India And Another18", the Apex Court held that Court must look beyond ostensible classification and to the purpose of the law and apply the test of 'palpable arbitrariness' in the context of the felt needs of the times and societal exigencies informed by experience to determine reasonableness of the classification. Apex Court while upholding the constitutional validity of Section 10-C of Income Tax Act, 1961 has held as under:
"8. The main question for decision is the discrimination alleged by the petitioners. The principles of valid classification are long settled by a catena of decisions of this Court but their application to a given case is quite often a vexed question. The problem is more vexed in cases falling within the grey zone. The principles are that those grouped together in one class must possess a Date of Order 11-09-2017 W.P.Nos.2169/2017 & 16733-743/2017 Sri. Kempanaika Vs. State of Karnataka & another common characteristic which distinguishes them from those excluded from the group; and this characteristic or intelligible differentia must have a rational nexus with the object sought to be achieved by the enactment. It is sufficient to cite the decision in In Re th Special Courts Bill, 1978 [1979] 2 SCR 476 and to refer to the propositions quoted at pp. 534-537 therein. Some of the propositions are stated thus: (SCC pp.424-25, para72) "(2) The State, in the exercise of its governmental power, has of necessity to make laws operating differently on different groups or classes of persons within its territory to attain particular ends in giving effect to its policies, and it must possess for that purpose large powers of distinguishing and classifying persons or things to be subjected to such laws.
(3) The Constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exact or scientific exclusion or inclusion of persons or things. The Courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is not palpably arbitrary.
(4) The principle underlying the guarantee of Article 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the Date of Order 11-09-2017 W.P.Nos.2169/2017 & 16733-743/2017 Sri. Kempanaika Vs. State of Karnataka & another same situation, and there should be no discrimination between one person and another if as regards the subject-
matter of the legislation their position is substantially the same.
(6) The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise even degree of evil, but the classification should never be arbitrary, artificial or evasive.
18 (1990)4 SCC 366 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 26 (7) The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and (2) that differentia must have a rational relation to the object sought to be achieved by the Act.
(8) The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while Article 14 forbids class discrimination by conferring privileges or imposing liabilities upon person arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liabilities proposed to be imposed, it does not forbid classification for the purpose of legislation, provided such classification is not arbitrary in the sense above mentioned." In "Income Tax Officer, Shillong And Others Vs R.Takin Roy Rymbai And Others19" the Apex Court held as follows:
"27. While it is true that a taxation law, cannot claim immunity from the equality clause in Article 14 of the Constitution, and has to pass like any other law, the equality test of that article, it must be remembered that the State has, in view of the intrinsic complexity of fiscal adjustments of diverse elements, a considerably wide discretion in the matter of classification for taxation purposes. Given legislative competence, the legislature has ample freedom to select and classify persons, districts, goods, properties, incomes and objects which it would tax, and which it would not tax. So long as the classification made within this wide and flexible range by a taxing statute does not transgress the fundamental principles underlying the doctrine of equality, it is not vulnerable on the ground of discrimination merely because it taxes or exempts from tax some incomes or objects and not others. Nor the mere fact that a tax falls more heavily on some in the same category, is by itself a ground to render the law invalid. It is only when within the range of its selection, the law operates unequally and cannot be justified on the basis of a valid classification, that there would be a violation of Article 14. (See East India Tobacco Co. v. State of Andhra Pradesh (AIR 1962 SC 1733)); Vivian Joseph Ferriera v. Municipal Corporation of Greater Bombay ((1972)1 SCC
70) ; Jaipur Hosiery Mills v. State of Rajasthan ((1970)2 SCC 26)."
Therefore, relying on "K.M.Mohamad Abdul Khader Firm Vs The State Of Tamil Nadu And Others" (referred supra) the issue regarding classification of one from the other and imposing tax etc., cannot be said to be discriminatory. In the said case, the issue before the Court was validity of State Legislation to impose additional tax. 19
(1976)1 SCC 916 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 27 The Court specifically held that it is not discriminatory. In view of the law referred above, classification of one group together as one class and the others as another class cannot be said to be unreasonable classification. Such classification of the Bars in the State for imposition of additional retail excise tax as one group while the shops being run by the State as another group cannot be said to be unreasonable classification to declare such imposition of additional retail excise tax as arbitrary and unreasonable.
Article 14 allows for reasonable classifications, where the classification fulfils the dual criteria of being based on a reasonable differentia which has a nexus with the object sough to be achieved. When there is no intelligible differentia in the creation of classes, on their predication that Four Star and Five Star hotels form one homogenous class, the Apex Court in "The Kerala Bar Hotels Association v. State of Kerala" (referred supra) upheld the policy adopted by the Government. In making an exception for only Five Star hotels, the Government engaged in sub-classification, which amounts to hostile discrimination as per the contention of the learned counsel appeared therein. Thus, it is clear that intelligent differentia between sale of liquor by shops and by Bars is only to implement prohibition of consumption of intoxicants. Therefore, such executive instructions by way of Government Order cannot be said to be an unreasonable classification.
To decide the reasonableness or arbitrariness the Apex Court in Re: The Special Courts Bill, 1978 (1979 (1) SCC 380), laid down certain propositions and some of them are hereunder:
(1) The first part of Article 14, which was adopted from the Irish Constitution, is a declaration of equality of the civil rights of all persons MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 28 within the territories of India. It enshrines a basic principle of republicanism.
The second part, which is a corollary of the first and is based on the last clause of the first section of the Fourteenth Amendment of the American Constitution, enjoins that equal protection shall be secured to all such persons in the enjoyment of their rights and liberties without discrimination of favouritism. It is a pledge of the protection of equal laws, that is, laws that operate alike on all persons under like circumstances. (2) The State, in the exercise of its governmental power, has of necessity to make laws operating differently on different groups or classes of persons within its territory to attain particular ends in giving effect to its policies, and it must possess for that purpose large powers of distinguishing and classifying persons or things to be subjected to such laws. (3) The constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exact or scientific exclusion or inclusion of persons or things. The courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is not palpably arbitrary.
(4) The principle underlying the guarantee of Article 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same.
(5) By the process of classification, the State has the power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject. This power, no doubt, in some degree is likely to produce some inequality; but if a law deals with the liberties of a number of well defined classes, it is not open to the charge of denial of equal protection on the ground that it has no application to other persons. Classification thus means segregation in classes which have a systematic relation, usually found in common properties and characteristics. It postulates a rational basis and does not mean herding together of certain persons and classes arbitrarily.
(6) The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise even degree of evil, but the classification should never be arbitrary, artificial or evasive.
MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 29 (7) The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act.
(8) The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while Article 14 forbids class discrimination by conferring privileges or imposing liabilities upon persons arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liabilities proposed to be imposed, it does not forbid classification for the purpose of legislation, provided such classification is not arbitrary in the sense abovementioned. (9) If the legislative policy is clear and definite and as an effective method of carrying out that policy a discretion is vested by the statute upon a body of administrators or officers to make selective application of the law to certain classes or groups of persons, the statute itself cannot be condemned as a piece of discriminatory legislation. In such cases, the power given to the executive body would import a duty on it to classify the subject-matter of legislation in accordance with the objective indicated in the statute. If the administrative body proceeds to classify persons or things on a basis which has no rational relation to the objective of the legislature, its action can be annulled as offending against the equal protection clause. On the other hand, if the statute itself does not disclose a definite policy or objective and it confers authority on another to make selection at its pleasure, the statute would be held on the face of it to be discriminatory, irrespective of the way in which it is applied.
(10) Whether a law conferring discretionary powers on an administrative authority is constitutionally valid or not should not be determined on the assumption that such authority will act in an arbitrary manner in exercising the discretion committed to it. Abuse of power given by law does occur; but the validity of the law cannot be contested because of such an apprehension. Discretionary power is not necessarily a discriminatory power. (11) Classification necessarily implies the making of a distinction or discrimination between persons classified and those who are not members of that class. It is the essence of a classification that upon the class are cast duties and burdens different from those resting upon the general public. Indeed, the very idea of classification is that of inequality, so that it goes MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 30 without saying that the mere fact of inequality in no manner determines the matter of constitutionality.
Thus, in view of the law laid down by the Apex Court, the classification is based on intelligent differentia and it is not a class legislation, which is prohibited, but it is a reasonable classification based on rationale and such differentiation or classification cannot be held to be discriminatory to quash the Government Order while exercising power of Judicial Review under Article 226 of the Constitution of India.
One of the major contentions urged before this Court is that the State issued executive instructions by G.O.Ms.No.471, Revenue (Excise-II) Department dated 22.11.2019 imposing higher rate of additional retail excise tax on the sale of liquor in Bars, which is arbitrary.
It is now too well-settled that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 of the Constitution and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of the rule of law. Satisfaction of this basic test in every State action is sine qua non to its validity and in this respect, the State cannot claim comparison with a private individual even in the field of contract. This distinction between the State and a private individual in the field of contract has to be borne in the mind. The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned Act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case.
MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 31 An obvious test to apply is to see whether there is any discernible principle emerging from the impugned Act and if so, does it satisfy the test of reasonableness. Where a mode is prescribed for doing an act and there is no impediment in following that procedure, performance of the act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness.
Every State action must be informed by reason and it follows that an act uninformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that 'be you ever so high, the laws are above you'. This is what men in power must remember, always. Almost a quarter century back, the Apex Court in "S.G. Jaisinghani v. Union of India20", indicated the test of arbitrariness and the pitfalls to be avoided in all State actions to prevent that vice, in a passage as under:
"In this context it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. (Dicey-"Law of the Constitution"-Tenth Edn., Introduction cx). 20 [1967] 2 SCR 703 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 32 In "United States v Wunderlich21" it is held that Law has reached its first finest moments when it has freed man from the unlimited discretion of some ruler, some civil or military official, some bureaucrat. Where discretion is absolute, man has always suffered. At times it has been his property that has been invaded, at times his privacy; at times his liberty of movement; at times his freedom of thought; at times his life. Absolute discretion is a ruthless master It is more destructive of freedom than any of mans other invention. John Wilkes (1770) 4 Burr 2528. Discretion means sound discretion guided by law it must be governed by rule not humor; it must not be arbitrary, vague or fanciful. In a state of governed by the rule of Law, discretion must be confined within clearly defined limits. A decision taken without any principle or rule is the antithesis of a decision of a decision taken in accordance with the rule of Law. In a State governed by the rule of law, discretion can never be absolute. Its exercise has always to be in conformity with rules; in contradistinction to being whimsical and should not stand smack of an attitude of "so let it be written, so let it be done". It is important to emphasize that the absence of arbitrary powers is the first essential of the Rule of Law upon which our whole constitutional system is based. In a system governed by the rule of law, discretion when conferred by upon executive authorities, must be confined within clearly defined limits.(vide:Aeltemesh Rein, Advocate, Supreme Court Of India Vs Union Of India And Others22) An authority, however, has to act properly for the purpose for which the power is conferred. He must take a decision in accordance with the provisions of the Act and the statutes. He must not be 21 (1951) 342 US 98 22 AIR 1988 SC 1768 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 33 guided by extraneous or irrelevant consideration. He must not act illegally, irrationally or arbitrarily. Any such illegal, irrational or arbitrary action or decision, whether in the nature of legislative, administrative or quasi-judicial exercise of power is liable to be quashed being violative of Article 14 of the Constitution. (vide: "Neelima Misra v. Harinder Kaur Paintal And Others23") In legislations enacted for general benefit and common good the responsibility is far graver. It demands purposeful approach. The exercise of discretion should be objective. Test of reasonableness is more strict. The public functionaries should be duty conscious rather than power charged. Its actions and decisions which touch the common man have to be tested on the touchstone of fairness and justice. That which is not fair and just is unreasonable. And what is unreasonable is arbitrary. An arbitrary action is ultra vires. It does not become bona fide and in good faith merely because no personal gain or benefit to the person exercising discretion should be established. An action is mala fide if it is contrary to the purpose for which it was authorised to be exercised. Dishonesty is discharge of duty vitiates the action without anything more. An action is bad even without proof of motive of dishonesty, if the authority is found to have acted contrary to reason. (Vide: Mahesh Chandra V. Regional Manager, U.P. Financial Corporation24) The expression "arbitrarily" means: in an unreasonable manner, as fixed or done capriciously or at pleasure, without adequate determining principle, not founded in the nature of things, 23 AIR 1990 SC 1402 24 AIR 1993 SC 935 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 34 non-rational, not done or acting according to reason or judgment, depending on the will alone. ("M/s Sharma Transport Rep.By Shri D.P.Sharma v. Government of A.P.25) A case of conferment of power together with a discretion which goes with it to enable proper exercise of the power and therefore it is coupled with a duty to shun arbitrariness in its exercise and to promote the object for which the power is conferred which undoubtedly is public interest and not individual or private gain, whim or caprice of any individual. (AP Aggarwal vs Govt of NCT of Delhi26) Any state action executive , legislative or judicial is void if it contravenes Article 14 of the Constitution of India. (Budhan v State of Bihar27) A statute may expressly make a discrimination between persons or things or may confer power on an authority who would be in a position to do so. Official arbitrariness is more subversive of the doctrine of equality than statutory discrimination. In respect of a statutory discrimination one knows where he stands, but the wand of official arbitrariness can be waved in all directions indiscriminately. (State Of Andhra Pradesh And Another Vs Nalla Raja Reddy And Others28) The absence of arbitrary power is the first postulate of rule of law, upon which whole Constitutional edifice is based. In a system governed by Rule of Law, discretion when conferred upon an 25 AIR 2002 SC 322 26 AIR 2000 SC 3689 27 AIR 1995 SC 191 28 AIR 1967 1458 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 35 executive authority must be confined within clearly defined limits. If the discretion is exercised without any principle or without any rule, it is a situation amounting to the antithesis of Rule of Law. Discretion means sound discretion guided by law or governed by known principles of rules, not by whim or fancy or caprice of the authority.
(Som Raj vs State of Haryana29) In view of the law laid down by the Apex Court in the judgments (referred supra), when the State Act or act of executive is unreasonable, it can be described as an arbitrary or caprice act of the State or its instrumentalities.
In the present facts of the case, the State reserved its right by incorporating clause (e) to Section 22 of the A.P.Excise Act, 1968 to impose additional retail tax etc. without specifying the upper limit of such tax or duty, but unbridled power is vested on the Government to impose such tax. Though it appears to be harsh, imposing additional retail excise tax at higher rate enhancing existing rate by 200% by issuing G.O.Ms.No.471 Revenue (Excise-II) Department dated 22.11.2019 only to reduce the consumption of alcohol or intoxicant in Bars in pursuit of implementation of prohibition against consumption of intoxicants under Article 47 of the Constitution of India.
Even assuming for a moment, imposing additional retail excise tax at higher rate on the liquor sold in the Bars indirectly creates burden on the consumer since it is an indirect tax. In "S. Kodar v. 29
AIR 1990 SC 1176 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 36 State of Kerala30" imposition of additional sales tax was considered by the Apex Court and held that it is in accordance with law.
In "Konduri Buchirajalingam vs. State of Hyderabad31"
the Apex Court while dealing with additional sales tax and rules held as follows:
"It is then said from another party.' As we said, the additional tax is a tax upon sales of goods and not upon the income of a dealer and so long as it is not made out that the tax is confiscatory, it is not possible to accept the contention that because the dealer is disabled from passing on the incidence of tax to the purchaser, the provisions of the Act impose an unreasonable restriction upon the fundamental rights of the appellants under article 19 (1) (g) or 19 (1) (f)".
Dealing with the contention that since the provisions of the Act imposed different rates of tax on different dealers depending upon their turnover there was a violation of Article 14 of the Constitution, Mathew J., who spoke for the Court observed:
"The last contention, namely, that the provisions of the Act impose different rates of tax upon different dealers depending upon their turnover which in effect means that the rate of tax on the sale of goods would vary with the volume of the turnover of a dealer and are, therefore, violative of article 14 is also without any basis. Classification of dealers on the basis of their respective turnovers for the purpose of graded imposition so long as it is based on differential criteria relevant to the legislative object to be achieved is not unconstitutional. A classification, depending upon the quantum of the turnover for the purpose of exemption from tax has been upheld in several decided cases. By parity of reasoning, it can be said that a legislative classification making the burden of the tax heavier in proportion to the increase in turnover would be reasonable. The basis is that just as in taxes upon income or upon transfers at death, so also in imposts upon business, the little man, by reason of inferior capacity to pay, should bear a lighter load of taxes, relatively as well as absolutely, than is borne by the big one. The flat rate is thought to be less efficient than the graded one as an instrument of social justice. The large dealer occupies a position of economic superiority by reason of his greater volume of his business. And to make his tax heavier, both absolutely and relatively, is not arbitrary discrimination, but an attempt 30 (1974) 34 STC 73 (SC) 31 (1958)9 STC 397 (SC) MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 37 to proportion the payment to capacity to pay and thus to arrive in the end at a more genuine equality. The economic wisdom of a tax is within the exclusive province of the legislature. The only question for the court to consider is whether there is rationality in the belief the legislature that capacity to pay the tax increases, by and large, with an increase of receipts."
Thus, the Apex Court also supported such classification of dealers and to the same effect, learned Advocate General placed reliance on ""K.M.Mohamad Abdul Khader Firm Vs The State Of Tamil Nadu And Others" (referred supra) and drawn the attention of this Court to paragraph Nos.11 and 12, wherein the Apex Court referred to the law laid down in "Konduri Buchirajalingam vs. State of Hyderabad" (referred supra) and the observations of Mathew J.
In "Khoday Distilleries Limited v. State of Karnataka"
(referred supra) the Apex Court summarized the law laid down in earlier judgments and held as follows:
"[a] The rights protected by Article 19[1] are not absolute but qualified. The qualifications are stated in Clauses [2] to [6] of Article 19. The fundamental rights guaranteed in Article 190[1](a) to (g) are, therefore, to be read along with the said qualifications. Even the rights guaranteed under the Constitutions of the other civilized countries are not absolute but are read subject to the implied limitations on them. Those implied limitations are made explicit by Clauses [2] to [6] of Article 19 of our Constitution.
[b] The right to practice any profession or to carry on any occupation, trade or business does not extend to practising a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilised societies. It does not entitle citizens to carry on trade or business in activities which are immoral and criminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the general public, i.e., res extra commercium, [outside commerce]. There cannot be business in crime.
[c] Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium being inherently harmful. A citizen has, therefore, MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 38 no fundamental right to do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited.
[d] Article 47 of the Constitution considers intoxicating drinks and drugs as injurious to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health. It, therefore, ordains the State to bring about prohibition of the consumption of intoxicating drinks which obviously include liquor, except for medicinal purposes. Article 47 is one of the Directive Principles which is fundamental in the governance of the country. The State has, therefore, the power to completely prohibit the manufacture, sale, possession, distribution and consumption of potable liquor as a beverage, both because it is inherently a dangerous article of consumption and also because of the Directive Principle contained in Article 47, except when it is used and consumed for medicinal purposes.
[e] For the same reason, the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor as a beverage and also sell the licences to the citizens for the said purpose by charging fees. This can be done under Article 19[6] or even otherwise.
[f] For the same reason, again, the State can impose limitations and restrictions on the trade or business in potable liquor as a beverage which restrictions are in nature different from those imposed on the trade or business in legitimate activities and goods and articles which are res commercium. The restrictions and limitations on the trade or business in potable liquor can again be both under Article 19[6] or otherwise. The restrictions and limitations can extend to the State carrying on the trade or business itself to the exclusion of and elimination of others and/or to preserving to itself the right to sell licences to do trade or business in the same, to others.
[g] When the State permits trade or business in the potable liquor with or without limitation, the citizen has the right to carry on trade or business subject to the limitations, if any, and the State cannot make discrimination between the citizens who are qualified to carry on the trade or business.
[h] The State can adopt any mode of selling the licences for trade or business with a view to maximise its revenue so long as the method adopted is not discriminatory.
[i] The State can carry on trade or business in potable liquor notwithstanding that it is an intoxicating drink and Article 47 enjoins it to prohibit its consumption. When the State carries on such business, it does so to restrict and regulate production, supply and consumption of liquor which is also an aspect of reasonable restriction in the interest of general public.
MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 39 The State cannot on that account be said to be carrying on an illegitimate business.
[j] The mere fact that the State levies taxes or fees on the production, sale and income derived from potable liquor whether the production, sale or income is legitimate or illegitimate, does not make the State a party to the said activities. The power of the State to raise revenue by levying taxes and fees should not be confused with the power of the State to prohibit or regulate the trade or business in question. The State exercises its two different powers on such occasions. Hence the mere fact that the State levies taxes and fees on trade or business in liquor or income derived from it, does not make the right to carry on trade or business in liquor a fundamental right, or even a legal right when such trade or business is completely prohibited.
[k] The State cannot prohibit trade or business in medicinal and toilet preparations containing liquor or alcohol. The State can, however, under Article 19[6] place reasonable restrictions on the right to trade or business in the same in the interests of general public.
[l] Likewise, the state cannot prohibit trade or business in industrial alcohol which is not used as a beverage but used legitimately for industrial purposes. The State, however, can place reasonable restrictions on the said trade or business in the interests of the general public under Article 19[6] of the Constitution.
[m] The restrictions placed on the trade or business in industrial alcohol or in medicinal and toilet preparations containing liquor or alcohol may also be for the purposes of preventing their abuse or diversion for use as or in beverage."
In "Government of Andhra Pradesh v. A.Hanumantha Rao"
(referred supra) the High Court of Andhra Pradesh at Hyderabad, while referring to earlier judgments of the Apex Court in "State of Punjab v. Devans Modern Breweries Limited", "Har Shankar v. Deputy Excise and Taxation Commissioner", and "State of Andhra Pradesh v. McDowell and Company" (referred supra) held that it is no doubt true that the State's policy to regulate the liquor trade, although not absolute, allows the widest discretion and is subject to minimal demands of equal protection requirement. Liquor licensees are not an inherently suspect classification, and the MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 40 Government can impose regulations on liquor traffic that are more stringent than would be permitted in other businesses. However, there is no warrant for unjust discrimination as between individuals engaged in the same business, especially where the right to sell liquor is recognised by Statute and Rules framed thereunder. Merely characterising liquor licence a privilege does not free the State and its instrumentalities and its agencies from right to equality requirement in licensing and, although it is a business, which is subject to a high degree of supervision and regulation in the public interest, considerations of fundamental fairness and justice comporting with equality clause must be evident. This aspect of the matter is not res integra as it is squarely covered by an authoritative pronouncement of the Supreme Court in "State of Madhya Pradesh v. Nandlal Jaiswal32". The Supreme Court, while reiterating that there is no fundamental right to carry on trade or business in liquor and no one can claim as against the State, the right to carry on trade or business in liquor and State cannot be compelled to part with its exclusive right or privilege of manufacturing and selling liquor, further observed as follows:
"... But when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. It is therefore, not possible to uphold the contention of the State Government and respondents No. 5-11 that Article 14 can have no application in a case where the licence to manufacture or sell liquor is being granted by the State Government The State cannot ride roughshod over the requirement of that Article.
But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State 32 [1987]1SCR1 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 41 Government for grant of licences for manufacture and sale of liquor. The Court would, in view of the inherently pernicious nature of the commodity allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the Court would hesitate to intervene and strike down what the State Government had done, unless it appears to be plainly arbitrary, irrational or mala fide... The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide."
In "Government of Andhra Pradesh v. A.Hanumantha Rao"
(referred supra), the High Court of Andhra Pradesh at Hyderabad also adverted to the law laid down in "Mohd. Fida Karim v. State of Bihar33" regarding Government's decision on sale of liquor, concluded that the discrimination is reasonable and arrived at a conclusion that the policy decision not to renew IL-24 licences has no rational basis and no nexus with the object sought to be achieved, namely streamlining of sale and consumption of liquor, to effectively eliminate the cartels in liquor trade and to ensure availability of good quality liquor at affordable prices, it is not necessary to go into the contentions based on discrimination between IL-24 and IL-I7 licensees.
In "Orient Weaving Mills (P) Ltd. v. The Union of India34"
the Apex Court held that exemption granted by the impugned notification from payment of excise duties on "cotton fabrics"
produced by certain Co-operative Societies is meant primarily for the protection of petty producers of "cotton fabrics" not owning more than four Power Looms, from unreasonable competition by big producers. Hence, it was held that it made a valid classification 33 [1992]2SCR408 34 AIR 1963 SC 98 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 42 between the goods produced by big establishments and similar goods produced by small Power Loom weavers who suffer from handicaps to which big establishments are not subject to. Hence, it was held that there has been no excessive delegation of power to exempt under Rule 8(1) of Central Excise Rules, 1944 nor are the notifications bad insofar as they exempt certain "classes of person" and not "classes of goods" from the excise duty. The impugned notification on hand exempts liquor sold by retail sellers in sealed bottles under the specified condition of MRP and liquor sold by Bar and Restaurants operating in rural areas without scope for much value addition unlike liquor along with food and refreshments sold by Bar and Restaurants of urban areas and liquor sold in similar manner by Boarding House and Lodges in rural areas by following the specific conditions attached to the licence for such sale and thereby they would have relative economic edge and there is scope of value addition and as such, impugned enactment as well as notification is not ultra vires and is within the State's power.
Learned Advocate General also relied on the Division Bench judgment of this Court in "Vijaya Traders v. The Commercial Tax Officer-I, Kadapa35" in support of his contentions as to classification of two groups for payment of sales tax and another tax levied on vehicles, wherein this Court held as follows:
"Theory of Classification: There is no constitutional embargo especially on taxing statutes to classify goods and persons for the purpose of levying and collecting different rates of tax in respect of different taxable events. The sovereign power to tax is wide enough to choose things and persons and exclude others from the levy. The burden is always on the person who impeaches a tax law as discriminatory. If the initial burden is discharged, the onus then shifts to the State to justify the classification. At the happening of 35 2012 (2) ALD 250 MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 43 these two things, there would be two situations rendering the impugned law defective, in that the classification may suffer from the vice of under- inclusion or over-inclusion. The group of people classified as one category for the purpose of levy can legitimately complain of discrimination if another group similarly situated is exempted from the levy. The issue then would be whether non-inclusion or under-inclusion of the compliant from the exempted group is discriminatory. In the case of over-inclusion, one category or group of things or persons is chosen for the levy of tax but others seeming dissimilar are also roped in with reference to the inclusion of taxable things or persons. The law permits invalidating a case of over-inclusion but any interference in a case of under-inclusion is not proper as any mandamus to include the category who suffered under-inclusion would amount to legislation. The legislature is free to recognize the degree of harm and may confine benefits or burdens to those classes or cases where the need is clearest, but the Court giving a direction to include and exclude a category is impermissible (Sakhawat Ali v. State or Orissa (AIR 1955 SC 166) and B.R. Kapur v. State of Tamil Nadu (AIR 2001 SC 3435).
That the State has wide discretion in selecting the persons or objects to tax is too well settled. Equally well settled is the proposition that a statute is not open to attack on the ground that the law taxes some persons or objects and not others. In East India Tobacco Company v. State of A.P. MANU/SC/0064/1962 : AIR 1962 SC 1733 : (1962) 13 STC 529, the Supreme Court while quoting with approval the following statement of law from Willis on 'Constitutional Law', held that "A State does not have to tax everything in order to tax some thing. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably....". The Supreme Court held that, "it is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14".
In M.Match Works v. Assistant Collector C.E. (AIR 1974 SC 497), the principles to test the validity of differential fiscal treatment of goods and things for the purpose of taxation were summarized. It is beneficial to quote the following. Certain principles which bear upon classification may be mentioned here. It is true that a State may classify persons and objects for the purpose of legislation and pass laws for the purpose of obtaining revenue or other objects. Every differentiation is not discrimination. But classification can be sustained only it is founded on pertinent and real differences as distinguished from irrelevant and artificial ones. The constitutional standard by which the sufficiency of the differentia which form a valid basis for classification may be measured, has been repeatedly stated by the Courts. If it rests on a difference which bears a fair and just relation to the object for which it is proposed, it is constitutional. To put it differently, the means must have nexus with the ends. Even so, a large latitude is allowed to the State for classification upon a reasonable basis and what is reasonable is a question of MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 44 practical details and a variety of factors which the Court will be reluctant and perhaps ill-equipped to investigate. In this imperfect world perfection even in grouping is an ambition hardly ever accomplished. In this context, we have to remember the relationship between the legislative and judicial departments of Government in the determination of the validity of classification. of course, in the last analysis Courts possess the power to pronounce on the constitutionality of the acts of the other branches whether a classification is based upon substantial differences or is arbitrary, fanciful and consequently illegal. At the same time, the question of classification is primarily for legislative judgment and ordinarily does not become a judicial question. A power to classify being extremely broad and based on diverse considerations of executive pragmatism, the Judicature cannot rush in where even the Legislature warily treads. All these operational restraints on judicial power must weigh more emphatically where the subject is taxation."
Sri Vedula Venkataramana, learned senior counsel, tried to distinguish the principles referred in "Vijaya Traders v. The Commercial Tax Officer-I, Kadapa" (referred supra) on the ground that the subject matter relates to imposition of tax on vehicles, but the Court has to discern the principle but not the goods subjected to tax and the principle is clear that such classification is permissible for imposition of tax on the goods/vehicles etc. Therefore, same principle is applicable to the present facts of the case to conclude that the imposition of additional retail excise tax on the liquor sold in the Bars based on such reasonable discrimination or classification based on rationale. Hence, I find that such discrimination is not unreasonable and it is based on settled principles of law.
Though all the advocates appearing for petitioners in one voice contended that the act of the State is arbitrary and violative of Article 14 of the Constitution of India, there is nothing to show that it is arbitrary. However, business on account of imposition of such additional retail excise tax on the liquor sold in the Bars, which is a special class by itself, without discriminating the Bars based on their license cannot be said to be arbitrary classification, but such MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 45 imposition may drastically decreases the volume of business of the Bars since the tax imposed on liquor in retail shops is lesser and enhances the retail business being run by the State. When the State adopted excise policy, such discrimination is permissible because the shops and Bars are two different classes in view of the definition of the Bars and Shops referred above.
Even otherwise, the petitioners are only licensees and they are not bound to bear the tax and the consumer alone has to bear the tax on the liquor they purchased. Except effect on the business of Bars, discrimination cannot be said to be arbitrary. When the imposition of additional retail tax is only with an intention to implement prohibition, partial prohibition at least, on consumption of intoxicant in pursuance of Article 47 of the Constitution of India, such imposition cannot be said to be unreasonable or arbitrary, but it is only to achieve the real object of Article 47 of the Constitution of India. Hence, classification cannot be described as discriminatory, unreasonable or arbitrary exercise of power by the State.
On an overall consideration of the law laid down by the Apex Court in various judgments (referred supra), it is clear that as long as such power is vested on the Government by virtue of clause (e) of Section 22 of the A.P.Excise Act, in pursuit of prohibition, to achieve the object of directive principles of state policy under Article 47 of the Constitution of India, though not enforceable under law, it is the duty of the State to impose prohibition. Therefore, the State has taken a decision to impose prohibition only to decrease consumption of intoxicant, but not otherwise. When the petitioners have no fundamental right under Article 19 (1) (g) of the Constitution of MSM,J W.Ps._19140, 19121, 19124, 19149 and 19038 _2019 46 India, approaching this Court on the ground of violation of fundamental right, is not acceptable.
In view of my foregoing discussion, I find no unreasonableness in the classification or arbitrariness in imposition of additional retail excise tax since it is only to implement prohibition though not total and reduce consumption of alcohol by consumers. Hence, I find no ground to declare the G.O.Ms.No.471, Revenue (Excise-II) Department, dated 22.11.2019 as illegal and arbitrary. Consequently, the writ petitions are liable to be dismissed.
In the result, the writ petitions are dismissed. No costs. Consequently, miscellaneous applications pending if any shall stand closed.
__________________________________________ JUSTICE M. SATYANARAYANA MURTHY 18.12.2019 JKS/Ksp